**4.2 Correlation**

**Table 4** denotes the Pearson correlation coefficients between the explanatory variables. Based on **Table 4**, the highest correlation is found between INFLATION and SSB-SCORE (*r* = 0.39). **Table 4** also presents that all the correlation coefficients are less than 0.95; hence, the collinearity between the variables is not a concern, as suggested by [40]. According to **Table 4**, SSB-SCORE shows a significant correlation with BAGE and INFLATION (*p* = 0.01). Further, INFLATION has a significant


*Number of IBs = 66; Number of observations = 381. ROA = return on asset; ROE = return on equity; SSB-SCORE =* Shari'ah *supervision score, BSIZE = bank size, BAGE = bank age, GDP = gross domestic product, INFLATION = inflation rate.*


for endogeneity, and thereby GMM can be used to control for this issue [37, 38]. To

þ *β*4*GDPit* þ *β*5*INFLATIONit* þ *εit* (1)

þ *β*3*BSIZEit* þ *β*4*BAGEit* þ *β*5*GDPit* þ *β*6*INFLATIONit* þ *β*7*CRISISit*

(2)

*PERFORMit* <sup>¼</sup> *<sup>β</sup>*0*PERFORMit*ð Þ �<sup>1</sup> <sup>þ</sup> *<sup>β</sup>*1*SSB*‐*SCOREit* <sup>þ</sup> *<sup>β</sup>*2*BSIZEit* <sup>þ</sup> *<sup>β</sup>*3*BAGEit*

*PERFORMit* <sup>¼</sup> *<sup>β</sup>*0*PERFORMit*ð Þ �<sup>1</sup> <sup>þ</sup> *<sup>β</sup>*1*SSB*‐*SCOREit* <sup>þ</sup> *<sup>β</sup>*2*SSB*‐*SCORE* � *CRISISit*

where *i* indicates the IBs (*i* = 1, … .,66) and *t* indicates the annual time period (*t* = 2007, … .,2015), PERFORM = performance of IBs, SSB-SCORE = *Shari'ah* supervision score, SSB-SCORE � CRISIS = interaction term between SSB score and

<sup>4</sup> To capture the crisis impact, dummy interaction is employed following literature, in which: "1" for the

product, INFLATION = inflation rate, CRISIS = a dummy variable: "1" for the

period 2007–2009, "0" otherwise<sup>4</sup> and ε = error term.

<sup>3</sup> Dummy interaction is employed following literature [39].

period 2007–2009, otherwise "0" [31].

, BSIZE = bank size, BAGE = bank age, GDP = gross domestic

test the hypotheses, the following regression model is employed:

**Variables Definitions and coding Measurement**

Interaction term between SSB score

INFLATION Inflation Inflation rate

*and knowledge in the field of accounting/economic/finance & "0" otherwise).*

BSIZE Bank size Log of total assets

GDP Gross domestic product Log of GDP per capita

and financial crisis

ROA Return on assets Net income divided by average total assets ROE Return on equity Net income divided by average total equity

SSB-SCORE *Shari'ah* supervision score SSB-SIZE+SSB-CRM + SSB-DQ + SSB-REP+ SSB-

BAGE Bank age Log of years since the bank was established

CRISIS Financial crisis A dummy variable: "1" for the period 2007–

*The SSB score sums the value of the dichotomous characteristics of the SSB, which takes a score bounded by 0–1, namely (SSB size: "1" for banks with 5 or more members & "0" otherwise), (SSB cross-membership: "1" if at least one SSB scholar with cross-membership & "0" otherwise), (SSB educational qualification: "1" if at least one SSB scholar with PhD & "0" otherwise), (SSB reputation: "1" if at least one SSB scholar sits on the SSB of AAOIFI and at least two* Shari'ah *board memberships & "0" otherwise) and (SSB expertise: "1" if at least one SSB scholar with experience*

*SSB-SIZE = SSB size; SSB-CRM = SSB cross-membership; SSB-DQ = SSB educational qualification; SSB-REP = SSB*

EXPER\*

2009, "0" otherwise

SSB score multiplied by dummy variable: "1" for

the period 2007–2009, "0" otherwise

**Dependent variables (bank performance)**

**Explanatory and control variables**

SSB-SCORE � CRISIS

*Banking and Finance*

*\**

**Table 2.**

þ *εit*

*reputation; SSB-EXPER = SSB expertise.*

*Measurement of variables.*

financial crisis<sup>3</sup>

**42**

*Descriptive statistics.*

